A historic but aging plaza in the heart of downtown Minneapolis has dodged the wrecking ball after preservationists appeared to win a battle with City Hall to save it.

Located on the west end of Nicollet Mall, Peavey Plaza’s cascading concrete steps and gurgling fountains have long provided a midday escape for downtown workers on their lunch breaks. But city officials say the concrete is deteriorating, plumbing repeatedly fails, the space is inadequate for public events and it lacks handicap accessibility.

The City Council voted more than a year ago to tear the plaza down and start from scratch, making way for a more open, event-friendly space. But a lawsuit and historic listing have forced them to retreat. The demolition approval expired in June, and Mayor R.T. Rybak said talks to reach a settlement over plaza improvements with the preservation groups who filed suit are at a stalemate.

“I spent a significant amount of time negotiating with the preservation community and council members,” Rybak said Thursday. “But there just does not seem to be a practical common ground right now. So we’ll live with the status quo for a while.”

The two groups leading the preservation effort, the Preservation Alliance of Minnesota and Washington-based Cultural Landscape Foundation, said in a joint statement that they were pleased the city “recognizes the historic value of Peavey Plaza” and has abandoned the demolition. They said they will work with the city to develop rehab plans for the space.

A rendering of the city’s original proposed redesign for Peavey Plaza was unveiled in 2011. The full demolition is no longer underway, but improvements such as handicap accessibility are in the works.

At issue is landscape architect M. Paul Friedberg’s 1975 design of the plaza, which preservationists say is one of his most important works. Architectural historian Charlene Roise wrote in a court affidavit that it is a “seminal work of a landscape architect who had a profound influence on the profession.” In January, the plaza was listed in the National Register of Historic Places, hurting the city’s legal case.

In the lawsuit to prevent demolition, the groups argued that the site is a “protectable natural resource” that could be improved without destroying it. Friedberg himself wrote that an elevator could be installed, for example, to accommodate requirements in the Americans with Disabilities Act.

A barren scene

For now, Peavey has become sleepy. On Thursday afternoon, while the rest of Nicollet Mall was teeming with lunch hour crowds, the plaza was nearly empty. Its central reflecting pool was barren, as were all the fountains. The city did not turn the water on this year in anticipation of the construction, and engineer Mike Kennedy said it is too costly to run it until “final decisions are made on the project.”

One of the handful of people enjoying their lunch Thursday, Nicole Nyquist, said she does not have strong feelings about the design, as long as it is a place where people can congregate.

“You’re in an office all day, so getting out in the sunshine and [seeing a] little bit of nature in the city is good,” said Nyquist, a promotion coordinator at VEE Corp. “So I think that’s the most important part to me.”

Despite Rybak’s pessimism about settlement talks, Assistant City Attorney Erik Nilsson said Thursday that the two sides are trying to reach an agreement before an Aug. 23 hearing.

The discussions are centered on trying to reach a consensus that preserves more of the original plaza design while also improving handicap accessibility and ease of hosting events, Nilsson wrote in an e-mail. Those changes could be slight enough so as not to even require a new demolition permit, Nilsson said.

The situation is a setback for the City Council, which had high hopes for a $10 million redo — largely privately funded. The state allocated $2 million in bonding dollars for the project, and it remains unclear how much of that has already been spent. The redo was slated to coincide with a renovation of the adjoining Orchestra Hall, which is nearly complete.

Rybak said the city has bigger development projects on its plate, including Nicollet Mall, the Star Tribune land adjacent to the new Vikings stadium and the riverfront. He leaves office at the end of the year.

“We’ll … return to focusing on places we can make a big impact in the next couple of months,” Rybak said.